---



SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



Form 10-Q



Quarterly Report under Section 13 or 15 (d)
of the Securities Exchange Act of 1934



For the quarterly period ended: September 30, 2001        Commission File Number:  0-19589





ARGUSS COMMUNICATIONS, INC.(formerly "Arguss Holdings, Inc.")
(Exact name of Registrant as specified in its Charter)




Delaware

02-0413153(State or other jurisdiction of incorporation of organization)

(I.R.S. Employer Identification Number)




One Church Street, Suite 302, Rockville, Maryland

20850(Address of Principal Executive Offices)

(Zip Code)




Registrant's Telephone Number, including Area Code:
301-315-0027






Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.



Yes:
X

No:




As of November 1, 2001, there were 14,519,944 shares of Common Stock, $ .01 par value per share, outstanding.



---



ARGUSS COMMUNICATIONS, INC.



INDEX



PagePart I -
Financial Information:Item 1 -
Financial StatementsConsolidated Balance Sheets (Unaudited) - September 30, 2001 and December 31, 2000
3Consolidated Statements of Operations (Unaudited) - Three Months and Nine Months Ended September 30, 2001 and September 30, 2000
4Consolidated Statements of Cash Flows (Unaudited) - Nine Months Ended September 30, 2001 and September 30, 2000
5Notes to Consolidated Financial Statements
(Unaudited)
7Item 2 -
Management's Discussion and Analysis of Financial Condition and Results of Operations
12Item 3 -
Quantitative and Qualitative Disclosure about Market Risk
17Part II -
Other Information
18Items 1 through 6SignaturesExhibits




---



ARGUSS COMMUNICATIONS, INC.

CONSOLIDATED BALANCE SHEETS
(Unaudited)



Sept. 30, 2001

Dec. 31, 2000AssetsCurrent assets:Cash

$    4,340,000

$     474,000Restricted cash from customer advances

3,000

303,000Accounts receivable trade, net of allowance for doubtful accounts of $544,000 and $343,000 in 2001 and 2000, respectively

45,811,000

57,133,000Costs and earnings in excess of billings

11,773,000

18,156,000Inventories

4,279,000

4,610,000Other current assets

1,618,000

2,690,000Total current assets

67,824,000

83,366,000Property, plant and equipment, net

40,703,000

47,851,000Goodwill, net

121,999,000

127,393,000$ 230,526,000

$ 258,610,000Liabilities and Stockholders' EquityCurrent liabilities:Current portion of long-term debt

$  12,970,000

$   7,322,000Short-term borrowings

60,000,000

70,246,000Accounts payable

11,051,000

19,731,000Billings in excess of costs and earnings

141,000

470,000Customer advances

-

4,000Accrued expenses and other liabilities

12,340,000

10,223,000Deferred income taxes

229,000

261,000Total current liabilities

96,731,000

108,257,000Other liabilities

111,000

-Long-term debt, excluding current portion

1,497,000

12,688,000Deferred income taxes

4,377,000

4,377,000Total liabilities

102,716,000

125,322,000Stockholders' equity:Common stock $.01 par value

145,000

144,000Additional paid-in capital

114,233,000

113,860,000Retained earnings

13,942,000

19,284,000Common stock subscribed

(279,000)

-Accumulated comprehensive loss

(231,000)

-Total stockholders' equity

127,810,000

133,288,000$ 230,526,000

$ 258,610,000




The accompanying notes are an integral part of these financial statements.



---



ARGUSS COMMUNICATIONS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)



|                                             |  | Three Months Ended |  | Nine Months Ended
|-------------------------------------------- |  | ------------------ |  | -----------------
|                                             |  |                    |  |                  
|                                             |  | Sept. 30, 
 2001   |  | Sept. 30,
2000   
|                                             |  |                    |  |                  
|                                             |  |                    |  |                  
|Net sales                                    |  | $49,251,000        |  | $78,532,000      
|Cost of sales, excluding depreciation        |  | 36,972,000         |  | 56,261,000       
|                                             |  |                    |  |                  
|Gross profit, excluding depreciation         |  | 12,279,000         |  | 22,271,000       
|                                             |  |                    |  |                  
|Selling, general and administrative expenses |  | 5,789,000          |  | 5,794,000        
|Depreciation                                 |  | 3,085,000          |  | 3,016,000        
|Goodwill amortization                        |  | 1,798,000          |  | 1,786,000        
|Non-cash stock compensation                  |  | (22,000)           |  | 193,000          
|Engineering and development expenses         |  | 94,000             |  | 309,000          
|                                             |  |                    |  |                  
|Operating income (loss)                      |  | 1,535,000          |  | 11,173,000       
|                                             |  |                    |  |                  
|                                             |  |                    |  |                  
|Other income (expense):                      |  |                    |  |                  
|Interest and other income                    |  | 20,000             |  | 134,000          
|Interest expense                             |  | (1,418,000)        |  | (2,090,000)      
|                                             |  |                    |  |                  
|                                             |  |                    |  |                  
|Income (loss) before income taxes            |  | 137,000            |  | 9,217,000        
|Income tax (expense)                         |  | (740,000)          |  | (4,609,000)      
|                                             |  |                    |  |                  
|Net Income (loss)                            |  | ($603,000)         |  | $  4,608,000     
|                                             |  |                    |  |                  
|                                             |  |                    |  |                  
|Earnings (loss) per common share:            |  |                    |  |                  
|- basic                                      |  | ($.04)             |  | $.32             
|                                             |  |                    |  |                  
|- diluted                                    |  | ($.04)             |  | $.31             
|                                             |  |                    |  |                  
|                                             |  |                    |  |                  
|                                             |  |                    |  |                  
|Weighted average shares outstanding:         |  |                    |  |                  
|- basic                                      |  | 14,489,000         |  | 14,205,000       
|                                             |  |                    |  |                  
|- diluted                                    |  | 14,489,000         |  | 14,908,000       
|                                             |  |                    |  |                  



The accompanying notes are an integral part of these financial statements.



---



ARGUSS COMMUNICATIONS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)



|                                                                                                   |  | Nine Months Ended Sept. 30,
|-------------------------------------------------------------------------------------------------- |  | ---------------------------
|                                                                                                   |  |                            
|                                                                                                   |  | 2001                       
|                                                                                                   |  |                            
|Cash flows from operating activities:                                                              |  |                            
|Net income (loss)                                                                                  |  | ($5,341,000)               
|Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |  |                            
|Depreciation                                                                                       |  | 9,517,000                  
|Goodwill amortization                                                                              |  | 5,394,000                  
|Non-cash stock compensation                                                                        |  | 154,000                    
|Changes in assets and liabilities:                                                                 |  |                            
|Accounts receivable                                                                                |  | 11,322,000                 
|Costs and earnings in excess of billings                                                           |  | 6,679,000                  
|Inventories                                                                                        |  | 331,000                    
|Other current assets                                                                               |  | 1,072,000                  
|Accounts payable                                                                                   |  | (8,680,000)                
|Billings in excess of costs and earnings                                                           |  | (329,000)                  
|Accrued expenses and other liabilities                                                             |  | 1,837,000                  
|                                                                                                   |  |                            
|Net cash provided by (used in) operating activities                                                |  | 21,956,000                 
|                                                                                                   |  |                            
|                                                                                                   |  |                            
|                                                                                                   |  |                            
|Cash flows from investing activities:                                                              |  |                            
|Additions to property, plant and equipment                                                         |  | (3,985,000)                
|Proceeds from disposal of property, plant and equipment                                            |  | 1,616,000                  
|Additional payment to former shareholders of acquired companies                                    |  | -                          
|Purchase of telecom services companies, net                                                        |  | -                          
|                                                                                                   |  |                            
|Net cash used in investing activities                                                              |  | (2,369,000)                
|                                                                                                   |  |                            
|                                                                                                   |  |                            
|                                                                                                   |  |                            
|Cash flows from financing activities:                                                              |  |                            
|Proceeds from (repayments of) lines of credit                                                      |  | (10,254,000)               
|Net repayments of long-term debt                                                                   |  | (5,535,000)                
|Issuance of common stock                                                                           |  | 68,000                     
|                                                                                                   |  |                            
|Net cash provided by (used in) financing activities                                                |  | (15,721,000)               
|                                                                                                   |  |                            
|                                                                                                   |  |                            
|Net increase (decrease) in cash                                                                    |  | 3,866,000                  
|                                                                                                   |  |                            
|                                                                                                   |  |                            
|Cash at beginning of period                                                                        |  | 474,000                    
|                                                                                                   |  |                            
|                                                                                                   |  |                            
|Cash at end of period                                                                              |  | $  4,340,000               
|                                                                                                   |  |                            



(continued)



---



ARGUSS COMMUNICATIONS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(Unaudited)





|                                                                   |  | Nine Months Ended Sept. 30,
|------------------------------------------------------------------ |  | ---------------------------
|                                                                   |  |                            
|                                                                   |  | 2001                       
|                                                                   |  |                            
|                                                                   |  |                            
|Supplemental disclosures of cash paid (received) for:              |  |                            
|Interest                                                           |  | $ 4,630,000                
|Corporate income taxes                                             |  | (1,405,000)                
|                                                                   |  |                            
|Supplemental disclosure of investing and financing activities:     |  |                            
|                                                                   |  |                            
|Fair value of assets acquired:                                     |  |                            
|                                                                   |  |                            
|Accounts receivable                                                |  |                            
|Other current assets                                               |  |                            
|Inventory                                                          |  |                            
|Property and equipment                                             |  |                            
|                                                                   |  |                            
|Total non-cash assets                                              |  |                            
|                                                                   |  |                            
|Liabilities                                                        |  |                            
|Long-term debt                                                     |  |                            
|                                                                   |  |                            
|Net non-cash assets acquired                                       |  |                            
|                                                                   |  |                            
|Cash acquired                                                      |  |                            
|                                                                   |  |                            
|Fair value of net assets acquired                                  |  |                            
|Excess of costs over fair value of net assets acquired             |  |                            
|                                                                   |  |                            
|Purchase price                                                     |  |                            
|                                                                   |  |                            
|                                                                   |  |                            
|Common stock issued                                                |  |                            
|Cash paid                                                          |  |                            
|Cash acquired                                                      |  |                            
|Amounts due to former shareholders of acquired companies           |  |                            
|Common stock issuable to former shareholders of acquired companies |  |                            
|                                                                   |  |                            
|Purchase price                                                     |  |                            
|                                                                   |  |                            



The accompanying notes are an integral part of these consolidated financial statements.



---



ARGUSS COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Unaudited)



A)     Organization

The Company conducts its operations through its wholly owned subsidiaries, Arguss Communications Group, MBT. ("ACG") and Conceptronic, Inc. ("Conceptronic"). ACG is a leading provider of telecommunications infrastructure services including project management, design, engineering, construction and maintenance for Internet, telecommunications and broadband service providers. Conceptronic manufactures and sells highly advanced, computer-controlled equipment used in the surface mount electronics circuit assembly industry ("SMT").



B)     Basis for Presentation

As permitted by the rules of the Securities and Exchange Commission (the "Commission") applicable to quarterly reports on Form 10-Q, these notes are condensed and do not contain all disclosures required by accounting principles generally accepted in the United States. Reference should be made to the financial statements and related notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2000, filed with the Commission on March 7, 2001.

In the opinion of the Company, the accompanying unaudited financial statements contain all adjustments considered necessary to present fairly the financial position of the Company as of September 30, 2001 and the results of operations and cash flows for the periods presented. The Company prepares its interim financial information using the same accounting principles as it does for its annual financial statements.

The Company's telecom services operations are expected to have seasonally weaker results in the first and fourth quarters of the year, and may produce stronger results in the second and third quarters. This seasonality is primarily due to the effect of winter weather on outside plant activities in the northern areas served by ACG, as well as reduced daylight hours and customer budgetary constraints. Certain customers tend to complete budgeted capital expenditures before the end of the year, and postpone additional expenditures until the subsequent fiscal period.

Certain amounts in the 2000 financial statements have been reclassified for comparability with the 2001 presentation.



C)     Goodwill

Goodwill is amortized using a twenty-year amortization period. The Company continually evaluates whether events or circumstances have occurred that indicate that the remaining useful life of goodwill may warrant revision or that the remaining balance may not be recoverable. When factors indicate that goodwill should be evaluated for possible impairment, the Company uses the estimated undiscounted cash flow of the business enterprise over the remaining life of the asset in determining whether the asset is recoverable.



D)     Earnings per Share

Basic earnings (loss) per common share are computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per common share reflect the maximum dilution that would have resulted from the exercise of stock options and warrants and other contingently issuable shares. Diluted earnings (loss) per common share are computed by dividing net income (loss) by the weighted average number of common shares and all dilutive securities. During the three and nine months ended September 30, 2001, the Company reported a loss. Consequently, the Company did not give effect to potentially dilutive securities in the calculation of loss per share, as the result would have been anti-dilutive.



|                                                                                  |  | For the Three Months Ended September 30:
|--------------------------------------------------------------------------------- |  | ----------------------------------------
|                                                                                  |  |                                         
|                                                                                  |  | 2001                                    
|                                                                                  |  |                                         
|                                                                                  |  | Loss per Share                          
|                                                                                  |  |                                         
|                                                                                  |  |                                         
|Basic                                                                             |  | ($.04)                                  
|Effect of stock options and warrants                                              |  | -                                       
|Effect of additional shares to be issued for purchase of telecom services Company |  |                                         
|                                                                                  |  |                                         
|Diluted                                                                           |  | ($.04)                                  
|                                                                                  |  |                                         



|                                                                                  |  | For the Nine Months Ended September 30:
|--------------------------------------------------------------------------------- |  | ---------------------------------------
|                                                                                  |  |                                        
|                                                                                  |  | 2001                                   
|                                                                                  |  |                                        
|                                                                                  |  | Loss per Share                         
|                                                                                  |  |                                        
|                                                                                  |  |                                        
|Basic                                                                             |  | ($.37)                                 
|Effect of stock options and warrants                                              |  | -                                      
|Effect of additional shares to be issued for purchase of telecom services Company |  | -                                      
|                                                                                  |  |                                        
|Diluted                                                                           |  | ($.37)                                 
|                                                                                  |  |                                        

The following securities and stock options that could potentially dilute future earnings per common share were not included in the above computations, because to do so would have been anti-dilutive:

| | Three Months Ended |  | Nine Months Ended
| | ------------------ |  | -----------------
| | Sept. 30, 2001     |  | Sept. 30, 2001   
| |                    |  |                  
| |                    |  |                  
| | 3,445,000          |  | 3,476,000        



E)     Contract Accounting

The retainage included in accounts receivable, representing amounts withheld by contract with respect to ACG accounts receivable, was $2,112,000 and $7,227,000 at September 30, 2001 and December 31, 2000, respectively. The Company expects to collect substantially all the retainage within one year.

|                                                                     |  | Sept. 30, 2001 |  | December 31, 2000
|-------------------------------------------------------------------- |  | -------------- |  | -----------------
|                                                                     |  |                |  |                  
|                                                                     |  |                |  |                  
|Costs incurred on uncompleted contracts                              |  | $87,024,000    |  | $129,847,000     
|Estimated earnings                                                   |  | 15,338,000     |  | 29,880,000       
|                                                                     |  |                |  |                  
|                                                                     |  | 102,362,000    |  | 159,727,000      
|Less: Billings to date                                               |  | 90,730,000     |  | 142,041,000      
|                                                                     |  |                |  |                  
|                                                                     |  | $11,632,000    |  | $ 17,686,000     
|                                                                     |  |                |  |                  
|                                                                     |  |                |  |                  
|Included in accompanying balance sheets under the following caption: |  |                |  |                  
|Costs and earnings in excess of billings                             |  | $11,773,000    |  | $ 18,156,000     
|                                                                     |  |                |  |                  
|Billings in excess of costs and earnings                             |  | (141,000)      |  | (470,000)        
|                                                                     |  |                |  |                  
|                                                                     |  |                |  |                  
|Net                                                                  |  | $11,632,000    |  | $ 17,686,000     
|                                                                     |  |                |  |                  



F)     Segment Information

SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information" establishes standards for reporting information about operating segments in interim financial reports issued to stockholders. It also establishes standards for related disclosures about products and services and geographic areas. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and assessing performance.

The Company's two reportable segments are telecom services and manufacturing. The Company conducts its operations through its wholly owned subsidiaries, Arguss Communications Group, MBT. ("ACG") and Conceptronic, Inc. ("Conceptronic"). ACG is a leading provider of telecommunications infrastructure services including project management, design, engineering, construction and maintenance for Internet, telecommunications and broadband service providers. Conceptronic manufactures and sells highly advanced, computer-controlled equipment used in the surface mount electronics circuit assembly industry ("SMT").

Because the telecom system projects are fully integrated undertakings, the Company does not capture individually each component of the service functions performed for revenue reporting purposes. The manufacturing segment manufactures and sells highly advanced, computer-controlled equipment used in the SMT circuit assembly industry. The "All Other" column includes the Company's corporate and unallocated expenses.

The Company's reportable segments are organized in separate business units with different management, technology and services. The respective segments account for their respective businesses using the same accounting policies used in the consolidated financial statements. Financial information concerning the Company's reportable segments net of inter-company transactions is shown in the following tables.



|                                           |  | Three Months Ended
Sept. 30, 2001
|------------------------------------------ |  | ---------------------------------
|                                           |  |                                  
|                                           |  | Telecom                          
|                                           |  | Services                         
|                                           |  |                                  
|                                           |  |                                  
|External sales                             |  | $  48,079,000                    
|Cost of sales, excluding depreciation      |  | 35,747,000                       
|                                           |  |                                  
|Gross profit, excluding depreciation       |  | 12,332,000                       
|Operating expenses, excluding depreciation |  | 5,185,000                        
|Depreciation                               |  | 3,058,000                        
|Goodwill amortization                      |  | 1,798,000                        
|Non-cash compensation expense              |  | -                                
|Engineering and development                |  | -                                
|Interest and other income                  |  | (19,000)                         
|Interest expense                           |  | 1,160,000                        
|                                           |  |                                  
|Pretax (loss)                              |  | $    1,150,000                   
|                                           |  |                                  
|                                           |  |                                  
|Capital expenditures                       |  | $       395,000                  
|                                           |  |                                  
|Property, plant and equipment, net         |  | $  39,622,000                    
|                                           |  |                                  
|                                           |  |                                  
|Total assets                               |  | $218,755,000                     
|                                           |  |                                  
|                                           |  |                                  
|Total liabilities                          |  | $  76,938,000                    
|                                           |  |                                  



Three Months Ended
September 30, 2000TelecomServices

Manufacturing

All Other

TotalExternal sales

$  73,490,000

$  5,042,000

-

$  78,532,000Cost of sales, excluding depreciation

52,292,000

3,969,000

-

56,261,000Gross profit, excluding depreciation

21,198,000

1,073,000

-

22,271,000Operating expenses, excluding depreciation

4,644,000

1,150,000

-

5,794,000Depreciation

2,974,000

40,000

2,000

3,016,000Goodwill amortization

1,786,000

-

-

1,786,000Non-cash compensation expense

79,000

-

114,000

193,000Engineering and development

-

309,000

-

309,000Interest and other income

(125,000)

(9,000)

-

(134,000)Interest expense

2,004,000

86,000

-

2,090,000Pretax income (loss)

$    9,836,000

($503,000)

($116,000)

$    9,217,000Capital expenditures

$    8,741,000

$         2,000

-

$    8,743,000Property, plant and equipment, net

$  45,574,000

$  1,164,000

$       15,000

$  46,753,000Total assets

$267,640,000

$10,712,000

$  2,431,000

$280,783,000Total liabilities

$124,959,000

$  9,158,000

$14,836,000

$148,953,000




Nine Months EndedSept. 30, 2001TelecomServices

Manufacturing

All Other

TotalExternal sales

$139,878,000

$6,810,000

-

$146,688,000Cost of sales, excluding depreciation

107,914,000

6,424,000

-

114,338,000Gross profit, excluding depreciation

31,964,000

386,000

-

32,350,000Operating expenses, excluding depreciation

15,162,000

2,541,000

105,000

17,808,000Depreciation

9,426,000

81,000

10,000

9,517,000Goodwill amortization

5,394,000

-

-

5,394,000Non-cash compensation expense

100,000

-

54,000

154,000Engineering and development

-

460,000

-

460,000Interest and other income

(226,000)

(11,000)

(15,000)

(252,000)Interest expense

4,159,000

253,000

165,000

4,577,000Pretax (loss)

($2,051,000)

($2,938,000)

($319,000)

($5,308,000)Capital expenditures

$    3,968,000

$     16,000

$         1,000

$    3,985,000Property, plant and equipment, net

$  39,622,000

$1,076,000

$         5,000

$  40,703,000Total assets

$218,755,000

$6,831,000

$  4,940,000

$230,526,000Total liabilities

$  76,938,000

$8,091,000

$17,687,000

$102,716,000




Nine Months EndedSeptember 30, 2000TelecomServices

Manufacturing

All Other

TotalExternal sales

$184,318,000

$16,367,000

-

$200,685,000Cost of sales, excluding depreciation

134,960,000

12,613,000

-

147,573,000Gross profit, excluding depreciation

49,358,000

3,754,000

-

53,112,000Operating expenses, excluding depreciation

12,546,000

3,724,000

-

16,270,000Depreciation

7,999,000

119,000

9,000

8,127,000Goodwill amortization

4,874,000

-

-

4,874,000Non-cash compensation expense

141,000

-

191,000

332,000Engineering and development

-

809,000

-

809,000Interest and other income

(384,000)

(16,000)

-

(400,000)Interest expense

4,827,000

209,000

-

5,036,000Pretax income (loss)

$  19,355,000

($1,091,000)

($200,000)

$  18,064,000Capital expenditures

$  13,040,000

$       10,000

$         2,000

$  13,052,000Property, plant and equipment, net

$  45,574,000

$  1,164,000

$       15,000

$  46,753,000Total assets

$267,640,000

$10,712,000

$  2,431,000

$280,783,000Total liabilities

$124,959,000

$  9,158,000

$14,836,000

$148,953,000




G)     Bank Financing

As of September 30, 2001, the Company was in violation of certain financial covenants in its syndicated credit agreement. Arguss has entered into an agreement with its lenders whereby its lenders agree to forbear their rights under the credit agreement to call Arguss' borrowings through December 31, 2001. As a result, Arguss has classified all of the borrowings under the credit facility as current at September 30, 2001. In addition, Arguss is negotiating with its banks to obtain a permanent restructuring of the syndicated credit agreement. Management expects to have a renegotiated credit agreement in place with its lenders prior to the expiration of the forbearance agreement.

Under the forbearance agreement, Arguss has agreed to a reduction in available revolving credit from $120,000,000 to $70,000,000 and to a prohibition against LIBOR based borrowing. Also under the agreement, Arguss has agreed to pay a forbearance fee of $165,000, which was accrued for at September 30, 2001. Under the provisions of the forbearance, all borrowings under the revolving credit facility and the five-year term facility will bear interest at prime rate plus 2%.

At September 30, 2001, the Company has $60,000,000 outstanding under the revolving credit facility with $10,000,000 remaining available. The Company also has a $30 million, in original notional amount, amortizing five-year term facility with $12,500,000 outstanding at September 30, 2001.



H)     Income Taxes

Goodwill amortization, which is nondeductible for income tax purposes, is added back to pretax income or loss to determine taxable income, thus creating an unusual relationship of the expected effective tax rate to pretax income or loss. The Company has determined that, because of the current volatility of the telecom market, it cannot make a reliable estimate of its annual effective income tax rate. Accordingly, the tax rate used is based on the year to date results of operations. To calculate the income tax provision for the period ending September 30, 2001, the Company applied its marginal tax rate to its year-to-date pretax loss plus nondeductible goodwill amortization, calculating a year-to-date tax expense of $33,000. In 2000, the tax expense was determined by applying the Company's estimated effective tax rate for he year to year-to-date pretax income calculating an expense of $9,032,000. A relatively small change in the Company's pre-tax income could produce a relatively large change in the Company's effective income tax rate.



---



ARGUSS COMMUNICATIONS, INC.



Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Results of Operations

The Company conducts its operations through its wholly owned subsidiaries, Arguss Communications Group, MBT. ("ACG") and Conceptronic, Inc. ("Conceptronic"). ACG is a leading provider of telecommunications infrastructure services including project management, design, engineering, construction and maintenance for Internet, telecommunications and broadband service providers. Conceptronic manufactures and sells highly advanced, computer-controlled equipment used in the surface mount electronics circuit assembly industry ("SMT").

Three Months Ended September 30, 2001, Compared to Three Months Ended September 30, 2000

The Company had consolidated earnings before interest expense, taxes, depreciation, amortization and non-cash stock compensation (EBITDA) of $6,416,000 for the three months ended September 30, 2001, compared to $16,302,000 for the same period one year ago. For the three months ended September 30, 2001, EBITDA, as a percentage of consolidated net sales (EBITDA margin), was 13.0%, compared to 20.8% for the comparable period in 2000. ACG had EBITDA of $7,166,000 for the three months ended September 30, 2001, compared to $16,679,000 for the same period in 2000. ACG achieved an EBITDA margin of 14.9% for the three months ended September 30, 2001 and 22.7% for the three months ended September 30, 2000. ACG's reduced EBITDA margin performance was due primarily to reduced volumes, as discussed below. Due to the significant non-cash expenses the Company incurs, management utilizes EBITDA as a valuable measurement of performance.

The Company had a consolidated net loss of $603,000 for the three months ended September 30, 2001, compared to net income of $4,609,000 for the three months ended September 30, 2000. The Company's results were negatively impacted by lower revenues at both ACG and Conceptronic. ACG has experienced reduced project activity as telecommunications customers have slowed their system buildouts. Conceptronic's customers have significantly reduced orders as the manufacturing sector and electronics industries have slowed. For the three months ended September 30, 2001, ACG had pretax profit of $1,151,000 which was offset by a pretax loss of $972,000 by Conceptronic.

Consolidated net sales for the three months ended September 30, 2001 were $49,251,000, compared to $78,532,000 for the three months ended September 30, 2000, a decrease of 37%. Acquisitions contributed $692,000 to revenue for the three months ended September 30, 2001. Operations owned for at least one year had a net sales decrease of $29,973,000 or 38% for the three months ended September 30, 2001. ACG experienced at 34% organic decline in sales while Conceptronic's sales decrease was $3,870,000 or 77%.

Consolidated gross profit margin, excluding depreciation, was 25% of sales for the three months ended September 30, 2001, compared to 28% of sales for the three months ended September 30, 2000. Gross profit margins, excluding depreciation, declined from 29% to 26%, or a decrease of $9 million at ACG, and from 21% to (5%), or a decrease of $1.1 million at Conceptronic from the three months ended September 30, 2000 to the three month period ended September 30, 2001. Reduced volumes have had a negative impact on margins.

Consolidated selling, general and administrative expenses for the three months ended September 30, 2001 were $5,789,000 or 12% of net sales, compared to $5,794,000 or 7% of net sales for the three months ended September 30, 2000. Acquisitions contributed $178,000 of increased and selling general and administrative expenses during the three months ended September 30, 2001. Conceptronic reduced selling, general and administrative expenses by $444,000 through cost controls introduced in response to the decrease in revenues. Excluding the impact of acquisitions and also of bad debt expenses of $321,000 during the three months ended September 30, 2001, compared to none in the three months ended September 30, 2000, ACG did not have a significant increase in selling general and administrative expenses. ACG has embarked on an aggressive cost containment program, which should have a positive impact on future financial results.

Depreciation expense increased to $3,085,000 for the three months ended September 30, 2001, compared to $3,016,000 for the three months ended September 30, 2000. Acquisitions contributed $22,000 of increased depreciation expenses in 2001.

Goodwill amortization, which is calculated using a twenty-year amortization period, increased to $1,798,000 from $1,786,000 from the comparable period one year ago due primarily to acquisitions made in 2000. Amortization expense on the goodwill related to these acquisitions was $14,000.

Interest expense for the three months ended September 30, 2001 was $1,418,000, compared to $2,090,000 for the comparable period in 2000. Lower prevailing interest rates, which were approximately 225 basis points lower during the three months ended September 30, 2001 compared with the same period in 2000, contributed to Arguss achieving $365,000 in interest expense savings. During the three months ended September 30, 2001, Arguss had average outstanding borrowings of $75,000,000 compared with $98,000,000 during the three months ended September 30, 2000. The lower average borrowing contributed to the remainder of Arguss' reduced interest expense.

Income tax expense was $740,000 for the three months ended September 30, 2001, compared to $4,609,000 in income tax expense for the three months ended September 30, 2000. Goodwill amortization, which is nondeductible for income tax purposes, is added back to pretax income or loss creating an unusual relationship of the expected effective tax rate to pretax income or loss. A relatively small change in the Company's pre-tax income could produce a relatively large change in the Company's effective income tax rate. The Company has determined, because of the current volatility in the telecom market, that it cannot make a reliable estimate of its annual effective income tax rate. Accordingly, the tax rate used for the third quarter tax provision is based on the year to date results of operations. To calculate an income tax provision for the period ending September 30, 2001 the Company applied its marginal tax rate to its year-to-date pretax loss plus nondeductible goodwill amortization, deriving a year-to-date income tax expense at September 30, 2001 of $33,000. From this, the tax expense for the six months ended June 30 was deducted resulting in an income tax expense of $740,000 for the three months ended September 30, 2001. In 2000, the expense was determined by applying the estimated effective tax rate for the year to year-to-date pretax income. For the three months ended September 30, 2001, the company had an effective tax rate of (1%) in 2001 and 50% in 2000.

Nine Months Ended September 30, 2001, Compared to Nine Months Ended September 30, 2000

The Company had consolidated earnings before interest expense, taxes, depreciation, amortization and non-cash stock compensation (EBITDA) of $14,334,000 for the nine months ended September 30, 2001, compared to $36,433,000 for the same period one year ago. For the nine months ended September 30, 2001, EBITDA, as a percentage of consolidated net sales (EBITDA margin), was 10%, compared to 18% for the comparable period in 2000. ACG had EBITDA of $17,028,000 for the nine months ended September 30, 2001, compared to $37,196,000 for the same period in 2000. ACG achieved an EBITDA margin of 12% for the nine months ended September 30, 2001 and 20% for the nine months ended September 30, 2000. ACG's weaker EBITDA margin performance was due primarily to reduced volumes as discussed below.

The Company had a consolidated net loss of $5,341,000 for the nine months ended September 30, 2001, compared to a net income of $9,032,000 for the nine months ended September 30, 2000. The Company's results were negatively impacted by lower revenue volume at both ACG and Conceptronic. ACG has experienced reduced project activity as telecommunications customers have slowed their system buildouts. Conceptronic's customers have significantly reduced orders as the manufacturing sector and electronics industries have slowed. For the nine months ended September 30, 2001, ACG and Conceptronic had respective pretax losses of $2,051,000 and $2,938,000.

Consolidated net sales for the nine months ended September 30, 2001 were $146,688,000, compared to approximately $200,685,000 for the nine months ended September 30, 2000, a decrease of 26%. Acquisitions contributed $16,044,000 of revenue during the nine months ended September 30, 2001. Operations owned for at least one year had a net sales decrease of $70,041,000 or 35% for the nine months ended September 30, 2001. ACG experienced a $60,484,000 or 33% organic decline in sales while Conceptronic's sales decrease was $9,557,000 or 56%.

Consolidated gross profit margin, excluding depreciation, was 22% of sales for the nine months ended September 30, 2001, compared to 26% of sales for the nine months ended September 30, 2000. Gross profit margins, excluding depreciation, declined from 27% to 23%, or a decrease of $17 million at ACG, and from 23% to 6% or a decrease of $3.4 million at Conceptronic from the nine months ended September 30, 2000 to the nine month period ended September 30, 2001. Reduced volumes have had a negative impact on margins.

Consolidated selling, general and administrative expenses for the nine months ended September 30, 2001 were $17,808,000 or 12% of net sales, compared to $16,270,000 or 8% of net sales for the nine months ended September 30, 2000. Acquisitions contributed $1,606,000 of increased and selling general and administrative expenses in 2001. Conceptronic reduced selling, general and administrative expenses by $1,183,000 through cost controls introduced in response to the decrease in revenues. Excluding bad debt expenses of $1,047,000 during the nine months ended September 30, 2001, compared to none in the nine months ended September 30, 2000, selling general and administrative expenses decreased $37,000 in ACG entities owned one year. ACG has embarked on an aggressive cost containment program which should have a positive impact on its future costs of doing business.

Depreciation expense increased to $9,517,000 for the nine months ended September 30, 2001, compared to $8,127,000 for the nine months ended September 30, 2000 due primarily to ACG which made significant equipment acquisitions during calendar year 2000. The equipment is depreciated over sixty months. Depreciation expense from companies acquired after September 30, 2000 was $604,000 during the nine months ended September 30, 2001. ACG made significant equipment acquisitions during calendar year 2000.

Goodwill amortization, which is calculated using a twenty-year amortization period, increased to $5,394,000 from $4,874,000 from the comparable period one year ago due primarily to acquisitions made throughout 2000. Amortization expense of the goodwill related to these acquisitions was $430,000 for the nine months ended September 30, 2001.

Interest expense for the nine months ended September 30, 2001 was $4,577,000, compared to $5,036,000 for the comparable period in 2000. Lower prevailing weighted average interest rates, which were approximately 125 basis points lower during the nine months ended September 30, 2001 than in the nine months ended September 30, 2000, contributed to Arguss achieving $459,000 in interest savings. Average outstanding borrowings were comparable between the two periods.

Income tax expense was $33,000 for the nine months ended September 30, 2001 compared to $9,032,000 of income tax expense in 2000. Goodwill amortization, which is nondeductible for income tax purposes, is added back to pretax income or loss creating an unusual relationship of the expected effective tax rate to pretax income or loss. A relatively small change in the Company's pre-tax income could produce a relatively large change in the Company's effective income tax rate. The Company has determined that, because of the current volatility in the telecom market, it cannot make a reliable estimate of its annual effective income tax rate. Accordingly, the tax rate used is based on the year to date results of operations. To calculate an income tax provision for the period ending September 30, 2001 the Company applied its marginal tax rate to its year-to-date pretax loss plus nondeductible goodwill amortization, deriving a year-to-date income tax expense at September 30, 2001 of $33,000. In 2000, the expense was determined by applying the estimated effective tax rate for the year to year-to-date pretax income. For the nine months ended September 30, the company had an effective tax rate of 1% in 2001 and 50% in 2000.

Liquidity and Capital Resources

Net cash provided by operations for the nine months ended September 30, 2001 was $21,956,000 compared with $3,541,000 of cash used by operations for the nine months ended September 30, 2000. The increase in cash provided by operating activities was due primarily to strong cash receipts on accounts receivable. Reduced project activity during the nine months ended September 30, 2001 compared to 2000 contributed to a reduction of costs in excess of billings. The net loss during the nine months ended September 30, 2001 was mitigated by the Company's substantial non-cash expenses.

Net cash used for investing activities for the nine months ended September 30, 2001 was $2,369,000, compared to $31,017,000 in the comparable period of 2000. Of the 2000 investing activities, $17,166,000 was used to make acquisitions compared to none in 2001. In 2000, pursuant to the provisions of certain purchase agreements, $799,000 was paid to former shareholders of acquired companies, compared to none in 2001. In 2001, $3,985,000 was spent on capital equipment acquisitions compared to $13,052,000 in 2000. The decrease in capital expenditures is due to management reducing capital budgets in light of decreased customer construction activity. The Company has budgeted approximately $5,000,000 in capital expenditures in 2001 compared to $17,849,000 spent during the entire year of 2000.

Net cash used in financing activities was $15,721,000 for the nine months ended September 30, 2001, compared to net cash provided by financing activities of $31,942,000 for the comparable period in 2000. In 2001, the Company used its strong cash flow from operating activities to paydown amounts borrowed on lines of credit. In 2000, the Company used its credit lines to finance acquisitions and capital expenditures.

As of September 30, 2001, the Company was in violation of certain financial covenants in its syndicated credit agreement. Arguss has entered into an agreement with its lenders whereby its lenders agree to forbear their rights under the credit agreement to call Arguss' borrowings through December 31, 2001. As a result, Arguss has classified all of the borrowings under the credit facility as current at September 30, 2001. In addition, Arguss is negotiating with its banks to obtain a permanent restructuring of the syndicated credit agreement. Management expects to have a renegotiated credit agreement in place with its lenders prior to the expiration of the forbearance agreement.

Under the forbearance agreement, Arguss has agreed to a reduction in available revolving credit from $120,000,000 to $70,000,000 and to a prohibition against LIBOR based borrowing. Also under the agreement, Arguss has agreed to pay a forbearance fee of $165,000, which was accrued for at September 30, 2001. Under the provisions of the forbearance, all borrowings under the revolving credit facility and the five-year term facility will bear interest at prime rate plus 2%.

At September 30, 2001, the Company has $60,000,000 outstanding under the revolving credit facility with $10,000,000 remaining available. The Company also has a $30 million, in original notional amount, amortizing five-year term facility with $12,500,000 outstanding at September 30, 2001.

To hedge the variable-term loan interest rate risk for $30 million in original notional amount, five-year, term financing facility, the Company has entered into an interest rate swap pursuant to which it pays fixed interest at a rate of 5.78% and receives variable interest on the same notional amount. The purpose of the hedge is to provide a measure of stability in the volatile environment of interest rates. The Company's interest rate swap agreement in place is designated as a cash flow hedge. During the nine months ended September 30, 2001, the Company's receipts under the interest rate swap aggregated $5,000. At September 30, 2001, the fair value of the swap, which expires with the maturity of the term debt on March 1, 2004, was a liability of $374,000.

Recent Accounting Pronouncements

On January 1, 2001, the Company adopted SFAS No. 133 "Accounting For Derivative Instruments and Hedging Activities." Adoption of SFAS No. 133 was not material to the Company's financial statements. During the nine months ended September 30, 2001, the Company had an unrealized loss on the hedge of $231,000 net of tax.

In July 2001, the FASB issued Statement No. 141, "Business Combinations", and Statement No. 142, "Goodwill and Other Intangible Assets". Statement 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001 as well as all purchase method business combinations completed after June 30, 2001. Statement 141 also specifies those criteria which intangible assets acquired in a purchase method business combination must meet to be recognized and reported apart from goodwill. Statement 142 will require that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead tested for impairment at least annually in accordance with the provisions of Statement 142. Statement 142 will also require that intangible assets with definite useful lives be amortized over their respective estimated useful lives to their estimated residential values, and reviewed for impairment in accordance with SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of.

The Company was required to adopt the provisions of Statement 141 as of July 1, 2001, and Statement 142 effective January 1, 2002. Furthermore, any goodwill and any intangible asset determined to have an indefinite useful life that are acquired in a purchase business combination completed after June 30, 2001 will not be amortized, but will continue to be evaluated for impairment in accordance with the appropriate pre-Statement 142 accounting literature. Goodwill and intangible assets acquired in business combinations completed before July 1, 2001 will continue to be amortized prior to the adoption of Statement 142.

Statement 141 will require upon adoption of Statement 142, that the Company evaluate its existing intangible assets and goodwill that were acquired in a prior purchase business combination, and to make any necessary reclassifications in order to conform with the new criteria in Statement 141 for recognition apart from goodwill. Upon adoption of Statement 142, the Company will be required to reassess the useful lives and residual values of all intangible assets acquired in purchase business combinations, and make any necessary amortization period adjustments by the end of the first interim period after adoption. In addition, to the extent an intangible asset is identified as having an indefinite useful life, the Company will be required to test the intangible asset for impairment in accordance with the provisions of Statement 142 within the first interim period. Any impairment loss will be measured as of the date of adoption and recognized as the cumulative effect of a change in accounting principle in the first interim period.

In connection with the transitional goodwill impairment evaluation, Statement 142 will require the Company to perform an assessment of whether there is an indication that goodwill (and equity-method goodwill) is impaired as of the date of adoption. To accomplish this the Company must identify its reporting units and determine the carrying value of each reporting unit by assigning the assets and liabilities, including the existing goodwill and intangible assets, to those reporting units as of the date of adoption. The Company will then have up to six months from the date of adoption to determine the fair value of each reporting unit and compare it to the reporting unit's carrying amount. To the extent a reporting unit's carrying amount exceeds its fair value, an indication exists that the reporting unit's goodwill may be impaired and the Company must perform the second step of the transitional impairment test. In the second step, the Company must compare the implied fair value of the reporting unit's goodwill, determined by allocating the reporting unit's fair value to all of its assets (recognized and unrecognized) and liabilities in a manner similar to a purchase price allocation in accordance with Statement 141, to its carrying amount, both of which would be measured as of the date of adoption. This second step is required to be completed as soon as possible, but no later than the end of the year of adoption. Any transitional impairment loss will be recognized as the cumulative effect of a change in accounting principle in the Company's statement of earnings.

As of the date of adoption of July 1, 2001, the Company had unamortized goodwill in the amount of $123,797,000, which will be subject to the transition provisions of Statements 141 and 142. Amortization expense related to goodwill was $6,668,000 and $5,394,000 for the year ended December 31, 2000 and the nine months ended September 30, 2001, respectively. Because of the extensive effort needed to comply with adopting Statements 141 and 142, it is not practicable to reasonably estimate the impact of adopting these Statements on the Company's financial statements at the date of this report, including whether any transitional impairment losses will be required to be recognized as the cumulative effect of a change in accounting principle.

In June 2001, the FASB issued Statement No. 143, "Accounting for Asset Retirement Obligations." Statement addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. This Statement applies to all entities. It applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and (or) the normal operation of a long-lived asset, except for certain obligations of lessees. As used in this Statement, a legal obligation is an obligation that a party is required to settle as a result of an existing or enacted law, statute, ordinance, or written or oral contract or by legal construction of a contract under the doctrine of promissory estoppel. This Statement amends FASB Statement No. 19, "Financial Accounting and Reporting by Oil and Gas Producing Companies". This Statement is effective for financial statements issued for fiscal years beginning after June 15, 2002. Earlier application is encouraged. The Company is currently reviewing this provision and will adopt it on July 1, 2002.

In August 2001, the FASB issued Statement No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." Statement 144 addresses financial accounting and reporting for the impairment or disposal of long-lived assets. This Statement supersedes FASB Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of", and the accounting and reporting provisions of APB Opinion No. 30, "Reporting the Results of Operations-Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions", for the disposal of a segment of a business. The provisions of this Statement are effective for financial statements issued for fiscal years beginning after December 15, 2001, and interim periods within those fiscal years, with early application encouraged. The provisions of this Statement generally are to be applied prospectively. The Company is currently reviewing this provision and will adopt it on January 1, 2002.

Forward Looking Statements

Statements made in the quarterly report that are not historical or current facts are "forward-looking statements" made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that actual results may differ substantially from such forward-looking statements. Forward looking statements may be subject to certain risks and uncertainties, including - but not limited to - continued acceptance of the Company's products and services in the marketplace, uncertainties surrounding new acquisitions, floating rate debt, risks of the construction industry, including weather and an inability to plan and schedule activity levels, doing business overseas and risks inherent in concentration of business in certain customers. All of these risks are detailed from time to time in the Company's filings with the Securities and Exchange Commission. Accordingly, the actual results of the Company could differ materially from such forward-looking statements.



Item 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


In the ordinary course of business, the Company is exposed to interest rate risk. To reduce variable-term loan interest rate risk, the Company has entered into an interest rate swap in the same notional amount, term and interest rate relationship to LIBOR as the Company's $12,500,000 variable-rate term loan. Arguss pays a fixed interest rate of 5.78% pursuant to the interest rate swap. Under the provisions of the forbearance agreement, the Company incurs interest at the Prime Rate plus 2%.

Interest rate swaps are entered into as a hedge of underlying debt instruments to effectively change the characteristics of the interest rate without actually changing the debt instrument. For fixed-rate debt, interest rate changes affect the fair value, but do not impact earnings or cash flow. Conversely, for floating-rate debt, interest rate changes generally do not affect the fair market value, but do impact future earnings and cash flow. A one percentage point decrease in interest rates would decrease the fair value of interest rate swaps by approximately $125,000. The earnings and cash flow impact for the next year resulting from a one percentage point increase in interest rates would be neutral because of the cash flow received from the swaps. Under the current syndicated credit agreement all of the principal of the variable rate debt subject to the interest rate swap would be repaid over the next three years thereby diminishing the impact of market valuations on hedges.



---



ARGUSS COMMUNICATIONS, INC.

PART II
Other Information



Items 1, 2, 4, and 5:  Not Applicable.

Item 3.
Exhibits


The following exhibits required to be filed herewith are attached or incorporated by reference to the filings previously made by the Company as noted below:

Exhibit No.



|3(a)    | Certificate of Incorporation, as amended, incorporated by reference as an Exhibit to the Company's Registration Statement on Form S-18 (No. 33-36142-B).                                                                                                                                                         
|------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |                                                                                                                                                                                                                                                                                                                  
|3(a)(I) | Certificate of Designation establishing Class A common stock incorporated by reference to Exhibit 4(a) to the Company's Registration Statement Form S-8 (No. 333-19277).                                                                                                                                         
|        |                                                                                                                                                                                                                                                                                                                  
|3(b)    | Bylaws, as amended, incorporated by reference as an Exhibit to the Company's Registration Statement Form S-18 (No. 33-36142-B).                                                                                                                                                                                  
|        |                                                                                                                                                                                                                                                                                                                  
|10(a)   | Equipment Lease between the Company and Eaton Financial Corporation incorporated by reference as an Exhibit to the Company's Registration Statement on Form S-18 (No. 33-36142-B).                                                                                                                               
|        |                                                                                                                                                                                                                                                                                                                  
|10(b)   | Line of Credit Agreement dated May 1, 1995 between the Company and the First National Bank of Boston incorporated by reference as an Exhibit to the Company's Form 10-KSB for 1995.                                                                                                                              
|        |                                                                                                                                                                                                                                                                                                                  
|10(c)   | Guarantee Agreement dated March 5, 1997 by Conceptronic in favor of Citizens Bank New Hampshire incorporated by reference in the Company's Current Report on Form 8-K, dated March 5, 1997.                                                                                                                      
|        |                                                                                                                                                                                                                                                                                                                  
|10(d)   | Agreement and Plan of Merger dated January 2, 1998 by and between Can-Am Construction, Inc. Arguss Holdings, Inc. and White Mountain Cable Construction Corp. incorporated by reference to Exhibit 10 to the Company's Current Report on Form 8-K, dated January 2, 1998.                                        
|        |                                                                                                                                                                                                                                                                                                                  
|10(e)   | Agreement and Plan of Merger dated January 2, 1998 by and between Schenck Communications, Inc., Arguss Holdings, Inc. and White Mountain Cable Construction Corp. incorporated by reference to Exhibit 10 to the Company's Current Report on Form 8-K, dated January 2, 1998.                                    
|        |                                                                                                                                                                                                                                                                                                                  
|10(f)   | Agreement and Plan of Merger dated October 6, 1997 by and between Rite Cable Construction, Inc., Arguss Holdings, Inc. and White Mountain Cable Construction Corp. incorporated by reference to Exhibit 10 to the Company's Current Report on Form 8-K, dated January 2, 1998.                                   
|        |                                                                                                                                                                                                                                                                                                                  
|10(g)   | Financing and Security Agreement dated September 11, 1997 by and among Arguss Holdings, Inc., White Mountain Cable Construction Corp., Conceptronic and Bank of America and related promissory notes incorporated by reference to Exhibit 10 as an Exhibit to the Company's Form 10-KSB for 1997.                
|        |                                                                                                                                                                                                                                                                                                                  
|10(h)   | First Amendment to Financing and Security Agreements dated October 6, 1997 by Arguss Holdings, Inc., White Mountain Cable Construction Corp., Conceptronic and Bank of America and related promissory notes incorporated by reference to Exhibit 10 in the Company's Form 10-KSB for 1997.                       
|        |                                                                                                                                                                                                                                                                                                                  
|10(i)   | Second Amendment to Financing and Security Agreement, dated January 2, 1998, by and among Arguss Holdings, Inc., White Mountain Cable Construction Corp., Conceptronic, Inc. and Bank of America incorporated by reference to Exhibit 10 to the Company's Form 10-QSB for the quarter ended March 31, 1998.      
|        |                                                                                                                                                                                                                                                                                                                  
|10(j)   | Third Amendment to Financing and Security Agreement dated May 11, 1998, by and among Arguss Holdings, Inc., White Mountain Cable Construction Corp., Conceptronic, Inc. and Bank of America, incorporated by reference to Exhibit 10 to the Company's Form-10-10-QSB for the quarter ended March 31, 1998.       
|        |                                                                                                                                                                                                                                                                                                                  
|10(k)   | Fourth Amendment to Financing and Security Agreement dated May 26, 1998, by and among Arguss Holdings, Inc., White Mountain Cable Construction Corp., Conceptronic, Inc. and Bank of America incorporated by reference to Exhibit 10 to the Company's Form-10-K, dated March 16, 1999.                           
|        |                                                                                                                                                                                                                                                                                                                  
|10(l)   | Fifth Amendment to Financing and Security Agreement dated May 31, 1998, by and among Arguss Holdings, Inc., White Mountain Cable Construction Corp., Conceptronic, Inc. and Bank of America, incorporated by reference to Exhibit 10 to the Company's Form-10-K, dated March 16, 1999.                           
|        |                                                                                                                                                                                                                                                                                                                  
|10(m)   | Sixth Amendment to Financing and Security Agreement dated June 26, 1998, by and among Arguss Holdings, Inc., White Mountain Cable Construction Corp., Conceptronic, Inc. and Bank of America, incorporated by reference to Exhibit 10 to the Company's Form 10-QSB for the quarter ended June 30, 1998.          
|        |                                                                                                                                                                                                                                                                                                                  
|10(n)   | Credit Agreement dated March 19, 1999 by and among Arguss Holdings, Inc., and Bank of America, incorporated by reference to Exhibit 10 to the Company's Form 10-Q for the quarter ended March 31, 1999.                                                                                                          
|        |                                                                                                                                                                                                                                                                                                                  
|10(o)   | Agreement and Plan of Merger dated September 4, 1998 by and between Underground Specialties, Inc., Arguss Holdings, Inc. and White Mountain Cable Construction Corp. incorporated by reference to Exhibit 10 to the Company's current report on Form 8-K dated September 4, 1998 and filed on September 18, 1998.
|        |                                                                                                                                                                                                                                                                                                                  
|10(p)   | First Amendment to Credit Agreement dated March 22, 2000 by and among Arguss Holdings, Inc. and Bank of America, incorporated by reference to exhibit 10 to the Company's Form 10-Q for the quarter ended March 31, 2000.                                                                                        
|        |                                                                                                                                                                                                                                                                                                                  
|10(q)   | Agreement and Plan of Merger dated May 26, 2000 by and between U.S. Communications and Arguss Communications, Inc., incorporated by reference to Exhibit 10 to the Company's form 8-K, dated June 9, 2000.                                                                                                       
|        |                                                                                                                                                                                                                                                                                                                  
|10(r)   | Forbearance and Modification Agreement dated November 7, 2001 by and between Arguss Communications, Inc. and Bank of America.                                                                                                                                                                                    







SIGNATURES



Arguss Communications, Inc.November 14, 2001
By:
\s\ Rainer H. BosselmannRainer H. BosselmannChief Executive OfficerNovember 14, 2001
By:
\s\ Arthur F. TrudelArthur F. TrudelPrincipal Financial Officer and Principal Accounting Officer








---